Funding for Lending gives banks and building societies access to cheap money to fund mortgages and business loans. It means lenders don’t need to raise money from ordinary savers for this purpose and as a result savings rates have tumbled since the scheme was introduced last August.

The average cash Isa rate has fallen from 2.55pc to 1.7pc - but there is one Isa that ensures your savings will not be eroded by inflation.

This is an easy access cash Isa with First Direct – but the inflation-busting 3pc interest is only earned on a balance of £40,000. Customers must also have a First Direct current account to qualify.

If you don't pay tax, there are a few options if you are prepared to store your money away.

First Save has a five-year fixed rate bond paying 2.9pc gross/AER.

The ICICI, Union Bank UK and Shawbrook Bank are all offering five year fixed rate bonds paying 2.75pc gross/AER.

Ms Waycot said: “With Funding for Lending recently being extended, then the unpalatable truth is that savings rates will also stay low and savers will need to combat this by being vigilant for not only the best rates, but ensuring they get the best from the account by understanding the many conditions that can apply.”